If we are to avoid social unrest in Europe we need to develop a new basic social consensus to overcome sterile ideological confrontations and introduce the changes which will usher in a new future. The European summit in Amsterdam this week has provided a signpost as to how that can now come about - and Tony Blair, a practising Christian, has outlined the way forward.

There was a time when many people thought the American model of capitalism would make a triumphant progress in Europe. Yet, of the 15 governments represented in Amsterdam, 13 are now controlled by Social Democrats, alone or in coalitions. The United States has been successful in reducing taxes, deregulating the financial markets and restructuring the labour market. But all that has been accompanied by an excessive greed which ultimately serves only the interests of the rich and a cold-heartedness which goes against a century of European social policy.

Recent elections in France and Great Britain have shown that voters in Europe reject that. The majority of people are not ready to accept economic reforms which exact such a cost. Rising dividends and vastly higher top executives' salaries, on the one hand, and declining wages and fewer jobs, on the other, have proved unacceptable. The new Europe must serve not markets but people.

To say this is not to plead for a return to the old post-war consensus. Cuts in public spending will certainly be needed in the face of the world- wide economic challenges posed by globalisation, though they must be made in the right place. The welfare state can no longer be financed in the old way and must be reconstructed.

The Amsterdam summit has rightly rejected new and expensive job creation programmes; there can be no new jobs and no prosperity without increased competitiveness. So state involvement needs to be reduced and the labour market made more flexible. Social Democrats in the Netherlands and Scandinavia have followed the example of the US and Britain in public expenditure savings, market reforms, reduction of taxes and reviews of social security systems. Tony Blair's New Labour, above all, has broken the right-left pattern. (By contrast the Social Democratic Party in Germany looks like Old Labour: its rhetoric of the class struggle can no longer command a majority.)

But if new directions are called for they must be on a new ethical basis. The globalisation of the world's economy is inescapable and unstoppable, but it has some extremely negative side-effects. Should it be allowed to elevate the making of profit to the sole and supreme criterion we must expect serious social conflicts and crises. No one should have any false illusions: the issues here are not just economic questions, they are highly political and ultimately also ethical questions - and they involve the whole of society.

What we need is not just the globalisation of the economy, of technology and of the media but also a globalisation of ethics. For how is a world to become more just and more peaceful if, in its various regions, there are contrary ethical norms and frameworks, or even none at all? We need now to discover an ethical common denominator to which all nations and all interest groups, employers and employees, believers and non-believers, can commit themselves.

The answer is not a re-evangelised Christian Europe. But nor is it a purely technocratic Europe. Rather it must be one with an ethical foundation, without fundamentalism yet without an arbitrary pluralism. It must discover a binding ethic which enables individual fulfilment within the context of an acknowledged responsibility towards society.

To achieve those common values, the new Europe needs a balance between economic strategies and ethical judgement, between a stable currency and a stable society, between open markets and social justice. It needs to discover mechanisms to achieve a new equilibrium between slimmed-down production and social responsibility, between a policy of savings and structural reform, between human rights and human obligations - above all between the responsibilities of the state and of the individual.

Tony Blair has given the programme for this when he spoke of the need to make a "marriage of a more human society with economic competitiveness and flexibility in employment". But we do not need politicians who say one thing and then do another. We need politicians who have a vision and who then, in honesty and steadfastness, stand by it.

`A Global Ethic for Global Politics and Economics', by Hans Kung, is published this month by SCM Press (pounds 14.95 and pounds 25)

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